On the lack of price transparency in health care

When Victoria Caras was battling thyroid cancer, she created a detailed spreadsheet of the various charges showing up on her medical statements so she could figure out the true cost of her medical care.

Seven years later, patients all over the country find themselves similarly perplexed by their bills, says Caras, a medical billing advocate who helps patients negotiate or dismiss burdensome medical costs. The Affordable Care Act was designed to change the way doctors get paid by transitioning to a system that rewards doctors, hospitals and other providers for coordinating care and reducing hospital re-admissions instead of paying for each service rendered.

For now, patients continue to get confusing bills with a list of coded charges they don’t understand — and not all of them are covered by their insurance companies. Those patients who try to be smart about their health spending are finding it is nearly impossible to determine what is considered a good deal. Pricing data, when it’s available, shows that rates vary depending on the insurance company and the provider involved.

For their part, some insurance companies are trying to make patients aware of that information — and the wide variety of prices — before they get treated. UnitedHealth Group, for instance, offers a cost estimator that shows customers the various rates the insurer negotiated for certain procedures for hospitals and doctors in the network. For example, a knee replacement surgery in New York may cost anywhere between $28,536 and $74,010 depending on the hospital or medical provider. That final price tag includes a charge from $93 to $502 for an evaluation, a fee ranging from $27,786 to $67,980 for the knee replacement, a cost of $509 to $4,795 for rehabilitation, and $148 to $733 for a follow-up visit. (Members are given one estimate for each facility, according to their plan and prices may change if patients end up facing complications.)

For people who do have insurance, explanation of benefit forms issued by insurance companies contain numerous price tags for the same service. There is the charge set by the hospital or doctor’s office that is often different from the amount paid. Then there is the often dramatically lower rates negotiated by the insurance companies, which leverage their customer base to finagle lower prices. Finally, there is the amount actually owed by the patient. “I created the spreadsheet when I realized the amount the hospital billed for my surgery, and how many different claims there would be — each physician, hospital, labs, radiology,” says Caras.

Why are there so many numbers? And which price tag is the better measure of value? That’s what patients and patient advocates are still trying to figure out, says Caras. There is little known about how hospitals set those charge rates, an issue getting attention from patient advocates since it’s often the uninsured who get stuck with those higher bills. Even the rates negotiated by insurance companies vary considerably, a gap that some groups are hoping to close by making them more publicly available.

In the meantime, consumers who are being asked to shoulder a greater share of their insurance costs, partly because of the rise of high deductible plans, need to be better aware of that price variation. Some startups are working to address that demand by making it easier for consumers to sort through pricing information.

Healthcare Bluebook, for instance, allows workers to look up the negotiated rates their insurance company set for a service at one provider versus another. It also offers what it considers to be a “fair price” for a particular service in order to help consumers know if they’re getting a good deal. “This allows them to shop real-time for their care,” says chief executive Jeffrey Rice.

A task force made up of insurance companies, employers, doctors and consumers recently produced a report calling for greater transparency in medical care. The group, led by the Healthcare Financial Management Association, a nonprofit membership organization for health care finance professionals, created a list of recommendations. Among them, the group called on more insurance companies to provide tools detailing cost information online.

The report also recommended that insurance companies and medical providers offer a clear estimate to insured and uninsured patients, before a service is done, of what the person might pay out-of-pocket. “We do it in every other part of our society — we learn what it’s going to cost us to do something before we do it,” says Joe Fifer, chief executive of the Healthcare Financial Management Association. “So why should health care be any different?”

Written by Jonnelle Marte and published by the Market Watch, April 28, 2014.

FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U. S. C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www. law. cornell. edu/uscode/17/107. shtml“